Unlocking the Power of Blockchain: Learn What is Blockchain

To most people, blockchain is a mere trend or slang peculiar to folks in tech. Most times, blockchain comes up at the mention of cryptocurrencies, NFTs, metaverse, or web3.

It’s no surprise why people often confuse blockchain and crypto to mean the same thing. Well, for a fact, cryptocurrencies and NFTs are built using blockchain technology — but blockchain is more than that.

Blockchain is an emerging technology that is decentralized and securely stores vital information. With blockchain, brands across diverse industries can keep their businesses transparent and safe. Isn’t the blockchain awesome?

And now, you’re about to uncover everything about the blockchain. So, sit tight and enjoy the ride into the world of blockchain!

In the past, financial institutions — banks mostly — kept records by bookkeeping. Bookkeeping was done manually, making it tedious and time-consuming, but it was the only ledger to keep financial records.

Fast forward to the present, financial records are now automated, and customers can view bank statements as soon as transactions are completed. However, people still complain of failed transactions, double spending, hacks/fraud, and more. But those financial troubles can be curbed using blockchain technology.

Blockchain is a digitalized ledger that stores and distributes information across a network of several computers — these networks of computers are called nodes. Blockchain is decentralized as it is not controlled by any central authority, eliminating the influence of the Government and financial institutions while keeping information highly secure.

The information stored on the blockchain is public but tamper-proof. Everyone can see transactions on the blockchain, but no one can alter it. And that is why crypto, NFTs, and other web3 protocols are built on the blockchain.

What’s more, blockchain can be applied to other industries aside from web3. Hospitals can use blockchain to store patients’ medical records and streamline data sharing among health providers. Financial institutions can use blockchain to enhance security, eliminate fraud/scams, and increase efficiency in payment processing. A lot more industries can use blockchain to harness loopholes and shortcomings.

Looking back at how traditional financial systems work, banks and payment providers — like Mastercard, Paypal, and more — process transactions. You can send money using bank apps and pay for goods/services with your card. But there is one thing you can’t do; you can’t decide if the transaction will be fast, slow, or even processed — the financial institutions do.

On the flip side, blockchain works in a transparent and secure manner — you’ll see how your transaction is processed. Blockchain is the coalition of two words — block and chain. Every data on the blockchain is stored in a “block,” and individual blocks link together to form a “chain.”

Information stored on individual blocks is unique. Each block has a unique identifying number called a hash. The hash links each block to the one before and after it — this accounts for the blockchain being highly secure. You might then wonder how the information on the blockchain is verified and processed. Well, remember, the blockchain distributes information across a network of computers called nodes.

Nodes receive data and update it accordingly in a ledger, then pass the information to surrounding nodes — the process continues like that to ensure that the information is accurate and verified. Once the information is verified, a consensus is reached, and each node notifies other nodes until transactions are processed — this is known as a consensus mechanism.

Say I want to send $100 worth of Bitcoin to my good friend, Elon Musk. Before my transaction is completed, the nodes will receive info that I want my account to go down by $100 and Elon’s account to go up by $100. What then happens is each node records this in a ledger and passes it on to the next node till the info is verified, recorded, and stored on the blockchain.

Unlike traditional banking systems where only the bank, Elon, and myself can see the transaction and our account balances, everyone can see the transaction between Elon and me on the blockchain, including our account balances. So yeah, the blockchain is super transparent.

Now that you know how awesome the blockchain is, wouldn’t it be great to learn about its merits and shortcomings?

1. Blockchain is immutable: Information stored on the blockchain is forever recorded and cannot be altered. You won’t have to worry about anyone manipulating the details of your transactions or wallet’s balance.
2. Transparency: Anyone worldwide can view information stored on the blockchain as it is transparent. So yeah, you can check the wallet balance of your friends if you have their wallet address — they act similarly to bank addresses.
3. Decentralized: Since the blockchain is decentralized, no central authority controls it, no intermediaries, and no strict regulations or restrictions. You have complete control over your data and assets.
4. Higher Transaction Accuracy: The days of double spending or failed transactions are over as blockchain enables smooth and error-free transactions. Transactions pass through multiple nodes, ensuring the data is accurate and verified.
5. Higher Security: The blockchain is decentralized and no one has absolute control over how it works — this makes it impossible to alter transactions or data on the blockchain, eliminating fraud/scams.

1. Higher Implementation Cost: Blockchain is more efficient than traditional banking systems, but it comes with a huge cost. Businesses would need high maintenance costs to integrate blockchain into their processes.
2. Slower Transaction Time: It takes a lot of time to verify information on the blockchain and process transactions, making it slower than traditional bank transactions.
3. Data Modification: Since the blockchain is tamper-proof, it’s nearly impossible to modify data in cases of mistakes. You would need to spend a lot of money to change information on the blockchain, as the codes in all blocks would need to be rewritten.
4. Risk of Asset Loss: Blockchain is secure and decentralized, making it hard for anyone to access your data or wallet. However, if you lose your keys, you risk your assets being lost/stolen.
5. Lack of Fraud Traceability: Transactions on the blockchain are secure and anonymous; this makes it a getaway for fraudsters to complete transactions without being easily traced/caught.

Blockchain is an essential technology that will promote security across numerous industries, reshaping how we transact and secure data. There are many practical applications of the blockchain, with more to come as the technology keeps improving. Businesses need to harness the power of the blockchain and its potential to transform the future, and the time to begin is now.